Life insurance allows you to pass a small fortune without having to make extreme financial sacrifices yourself, but you may still wonder if it’s worthwhile. Here, you will see the benefits and downsides so that you can make an informed decision when purchasing a policy.
Pro: Untaxed Death Benefit Usable for Any Purpose
You’re in control of the amount that goes toward your beneficiaries. The death benefit is not subject to taxes. This way, you won’t be tempted to get a policy outside of your price range. Your loved ones won’t have the stress of determining how such a large sum of cash could place them in a higher tax bracket where they’ll be forced to pay higher taxes.
There also aren’t any rules as to what your loved ones can do with the funds. You’re not only giving them financial freedom in terms of the amount of the death benefit, but also in what they can do with it. Your loved ones can pay for items such as personal debts or entertainment. This can also go toward your funeral costs and medical bills.
Con: Your Loved Ones May Not Get the Death Benefit
This applies to a few specific cases. If you buy a Term Life policy, it will no longer be active after that term has passed.
Another instance is with guaranteed issue life insurance. These typically impose a 2-3 year waiting period. If you pass away before that time elapses, your beneficiaries won’t receive the death benefit.
If you surrender your policy, your loved ones will not get the death benefit, no matter how long you have paid premiums up until that point.
Pro: Your Costs Will Be Low if You’re Younger
Life insurance rewards early enrollment, as a higher life expectancy translates to more premiums paid. A younger person with low premiums will have paid enough by the time they pass away (or reach the final year their policy is active) for the insurance to disburse funds without being at a loss.
Con: It Can Take a Financial Toll if You’re Older
Older individuals can’t pay premiums for the same amount of time, so they must pay higher premiums to compensate.
Consider a $750,000 20-year Term Life policy. For someone at the age of 25 signing up for this policy, the monthly premium will be approximately $28 to $37 (females pay lower rates due to higher life expectancy). If a 55-year old enrolls, the premium will be anywhere from $155 to $223.
Pro: Game Changing Benefits Makes Life Insurance Affordable and Easy
At Game Changing Benefits, we strive to give you the best of what life insurance has to offer. There’s more than one type of life insurance to choose from, and with our help, you’ll get a policy that will give your loved ones peace of mind while allowing you to keep the downsides to a minimum. You can learn more by calling us today at 972-331-1060.